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Metro Bank reports 66% growth in deposits and first underlying profit

25th October 2016

Metro Bank PLC has delivered a strong trading performance in the third quarter of 2016.

Q3 Highlights

  • Deposits up 66% year-on-year to £7,297m ($9,486m)
  • Lending up 73%, year-on-year to £5,193m ($6,751m)
  • Revenue up 78% year-on-year to £53.4m ($69.4m)
  • Record 68,000 increase in customer accounts to a total of 848,000
  • Underlying profit before tax (1) at £0.6m (compared to a £3.4m loss in Q2 2016)

Note: all figures contained in this trading update are unaudited.
All figures in US$ have been translated at a rate of $1.30 to the £.

Quarter ending £ in millions30 Sept 201630 June 2016% Improvement In Qtr.% Improvement in Year
Assets £9,005 £8,351 8% 66%
Loans £5,193 £4,629 12% 73%
Deposits £7,297 £6,599 11% 66%
Loan to Deposit Ratio 71% 70% 1% 3%
Total Revenue £53.4 £46.3 15% 78%
Underlying profit/(loss) before tax per share £0.6 £(3.4) - -
Underlying profit/(loss) after tax per share £0.00 £(0.05) - -
Net interest margin 1.95% 1.93% - -

(1) Underlying profit/(loss) before tax excludes listing and related costs, the FSCS levy and impairment of plant &
equipment and intangible assets. The statutory loss after tax in the quarter of £0.4m is set out on page 5.

Craig Donaldson, Chief Executive Officer at Metro Bank said:
"I am delighted to announce another strong quarter, with substantial growth across lending, deposits and customer accounts as well as the bank reporting its first quarterly underlying profit. We continue to show strong deposit growth even as the cost of our deposits falls. This clearly demonstrates that our offering of high-impact, convenient high street stores, UK based contact centres and easy to use online and mobile services is persuasive for retail, business and private customers.

"We continue to expand the business to generate long-term, sustainable growth, with revenue up 78% year-on-year and an underlying quarterly profit before tax for the first time of £0.6m. As we move into underlying profit our customer-focused culture and commitment to providing a superior banking experience remain at the very forefront of our offering, and we look forward to welcoming even more retail, business and private banking customers to the banking revolution."

Vernon Hill, Chairman and Founder at Metro Bank said:
"Metro Bank is the revolution in British banking and, as we go from strength to strength, we continue to create 'Fans not Customers'. Our relentless focus on customer service and convenience has helped us to achieve so much in such a short period of time. Our thanks, as ever, must go to our colleagues, our investors and our Fans, who continue to show their support."

Highlights for the Quarter Ended 30 September 2016

  • As of 30 September total assets were £9,005m, up from £8,351m at 30 June 2016 and £5,438m at 30 September 2015; representing year-on-year growth of 66% and 8% growth in the quarter.
  • Robust net deposit growth per store per month of £5.6m ($7.2m) in Q3 2016 versus £5.7m ($7.4m) in Q2 2016, and £5.5m ($7.1m) in Q3 2015, exceeding our guidance.
  • Comparative store deposit growth (a measure of deposit growth using deposit numbers from stores that have been operating for more than a full year) is 61%.
  • The loan to deposit ratio increased to 71% (30 June 2016: 70%; 30 September 2015: 68%).
  • Underlying profit before tax has improved by 118% quarter-on-quarter to £0.6m (compared to a £3.4m loss in Q2 2016 and £9.6m in Q1 2016). Statutory loss after tax improved to £0.4m (compared to £5.9m in Q2 2016 and £11.1m in Q1). Underlying profit before tax benefited from £3.3m gains on securities in the quarter (Q2 £1.6m), more than offsetting a £0.7m adverse impact of the “lag effect” (assets re-pricing earlier than liabilities) following the recent reduction in Base Rates.
  • Cost of deposits in Q3 was 80bps, a reduction from the 87bps in Q2. Q4 will see a further fall as deposit re-pricing comes into effect following the reduction in Base Rate in August.
  • As of 30 September total deposits were £7,297m, up from £6,599m at 30 June 2016 and £4,387m at 30 September 2015; representing year-on-year growth of 66% and 11% in the quarter. Deposits for the third quarter grew £698m. Deposits from commercial customers represent 52% of 30 September 2016 total deposits (30 June 2016: 52%).
 30 Sept 2016
30 June 2016
% Change In Qtr.% Change in Year
Demand: non-interest bearing 2,019 1,749 15% 64%
Demand: interest bearing 3,167 2,854 11% 54%
Fixed Term 2,111 1,996 6% 93%
Deposits from customers 7,297 6.599 11% 66%
Deposits from customers includes:        
Deposits from retail customers 3,537 3,155 - -
Deposits from corporate customers 3,760 3,444 - -
  • Total loans as of 30 September were £5,193m, up from £4,629m at 30 June 2016 and £3,004m at 30 September 2015; an increase of 73% year-on-year, and a 12% increase in the quarter. Loans to commercial customers represent 35% of total lending as of 30 September 2016 (30 June 2016: 35%).
 30 Sept 2016 £'m30 June 2016 £'m% Change In Qtr.% Change in Year
Gross Loans and advances to customers 5,202 4,637 - -
Less: allowance for impairment (9) (8) - -
Net Loans and advances to customers 5,193 4,629 12% 73%
Gross loans and advances to customers includes:         
Commercial Loans 1,824 1,625 12%  65% 
Residential Mortgages 3,202 2,853 12% 77%
Consumer and other loans and advances 176 159 11% 80%
  • Customer acquisition goes from strength to strength. Customer accounts have increased from 780,000 on 30 June 2016 to 848,000 at 30 September 2016; a record quarterly net increase of 68,000 accounts. This represents an increase of 41% year-on-year and a 9% increase in the quarter.
  • Asset quality remains strong. Non-performing loans were 0.16% of the portfolio and the loan loss reserve as a percentage of non-performing loans was 108% at 30 September 2016. Year-to-date cost of risk is 0.10% at 30 September 2016.
  • Capital ratios remain robust and well above regulatory requirements. Common Equity Tier 1 Capital (“CET1”) as a percentage of risk weighted assets is 20.4%. Regulatory Leverage ratio is 7.4%. A move towards the advanced risk based (AIRB) approach in the medium term presents the opportunity to achieve greater capital efficiency.
  • We opened our 43rd store in Wimbledon on 21 October and will open our 44th in Clapham Junction on 28 October. Four more stores will open this year.

Analyst and investor call
An analyst and investor call will be held as follows:

Date: Wednesday 26 October 2016
Time: 2.00pm (BST)
From the UK dial: 0808 237 0030 (Toll Free)
From the US dial: 866 928 7517 (Toll Free)
Participant Pin: 24263139#
URL for other international dial in numbers:
An operator will assist you in joining the call.